Pound v Euro weakness as markets await next Prime Minister

In today’s Pound v Euro forecast, we’ll see how the exchange rate remains at the lower levels. This is as the markets attempt to guess who the next British Prime Minister will be.

Rates for GBP to EUR have fallen to just above 1.12, on the expectation that the next Prime Minster will seek to ensure that Britain is out of the European Union by 31st October 2019. The markets now await any Conservative leadership news, as the next Prime Minister’s views on Brexit will heavily direct the course of action.

After yesterday’s first round, which saw Boris Johnson way out in front, there are currently 7 candidates in the offing. It is expected that the final two will be whittled down by Thursday of next week. A poll will be held on Tuesday, with further votes to be held on Wednesday and Thursday if required.

Should I buy Euros now or wait?

The Pound to Euro exchange rate has dropped by over 4% in the last month. This is on the expectation that a ‘no deal’ Brexit may become a viable option, despite the reluctance of Parliament to allow this to happen.

Boris Johnson has been clear that he wishes to leave the ‘no deal’ possibility very much on the table and use it as a negotiating tool. This is something that Parliament had previously voted against this year. The division in Parliament over a ‘no deal’ Brexit continues to keep the markets guessing on how the British economy will fare and how the Pound will react.

The markets are becoming increasingly nervous about a ‘no deal’ Brexit, after the Labour Party lost an important vote in Parliament this week to stop a ‘no deal’ from happening. Expect considerable market volatility for GBP EUR as we await the next Prime Minister.

The Euro faces a tough economic future after the European Central Bank (ECB) indicated that it is prepared to take the necessary action when required to head off an economic downturn. ECB President Mario Draghi reiterated his comments this week, when he said that the central bank is “ready to use all the instruments in to the toolbox”.

The German Bundesbank has also reduced its growth forecasts for Germany to 0.6% this year, down from 1.6% expected in December. This highlights weakness in the engine room of the Eurozone economy. The US/China trade war and fears of a global slowdown, as well as Brexit, are all having a negative impact in the Eurozone as well as the global economy.

For more information on the Euro and assistance in making transfers, either buying or selling Euros, then please get in touch with me, James Lovick, at [email protected].